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Authors: Janet Lane and T. Scott Murray

Executive Summary

Workplaces are changing quickly. Machines or algorithms are replacing some tasks, and new and changing jobs require additional technical skills. To keep pace with these changes in current and future jobs, the ability to keep learning is the most important basic skill for any job. Because literacy is the most important “learning to learn skill,” Canada’s workforce requires high levels of literacy. However, many Canadian workers have poor literacy skills.

Literacy is not just the ability to read, it is the ability to read and understand well and then apply what has been read to a range of problems. According to international literacy assessments, more than 40% of Canada’s workforce does not have adequate levels of the literacy skills needed to learn efficiently and be highly productive in most jobs. Without this ability, many Canadians will not be able to keep their jobs – or find new ones – and a growing number of employers will not be able to find workers with the skills they need.

The problem is getting worse.

Younger generations, on average, have more education and are most recently out of school, and generally have higher scores that somewhat offset the lower average levels of skill of older workers. That said, the average scores of all age groups decreased between 2003 and 2011, according to the International Adult Literacy Survey (IALS, 2003) and the Programme of International Assessment of Adult Competencies (PIAAC, 2013).

In addition, people (even young people) tend to lose skills as they age, not through the aging process, but through lack of use. Up to 60% of Canadian employees experience skill mismatches, meaning they have either higher skills or lower skills than their jobs demand. This can cause skill loss. In particular, workers with the lowest skills are the least likely to be offered training by their employers, especially if their jobs are also low-skilled. Compounding the problem is that the likelihood of low-skilled jobs being automated or moved to other countries is growing; the need to upgrade skills in low-skilled workers is crucial.

The good news is that recent analysis of international adult skills data and key macroeconomic performance indicators (GDP per capita and labour productivity) shows that increasing the literacy skills in the workforce by an average of 1% would, over time, lead to a 3% increase in GDP, or $54 billion per year, every year, and a 5% increase in productivity. This is up from a 2004 report that showed a gain of 1.5% and 2.5% respectively. What is more, this research also shows that improving the skills of people at the lower end of the scale (Levels 1 and 2 on the five-level scale for literacy) will have more impact than improving the skills of people who are already at Level 3 or higher. As the people most at risk of losing their entire job to automation are the people employed in low-skilled jobs, upgrading their skills would have the added advantage of making them more employable in a new higher-skilled job.

Solutions to Canada’s literacy problem include efforts to:

Improve the literacy skills of graduates of K-12 and post-secondary programs

Understand the skills needs of employers and the skills proficiencies of the workforce through:

> Investigating the market for skills

> Building and implementing competency frameworks

Embed literacy in all workforce education and training initiatives for all working-aged adults

Stop skill loss in some workers through employers:

> Increasing the knowledge and skill intensity of their jobs

> Assessing the skills of job applicants with reliable tools

> Investing in literacy, numeracy and problem-solving skill upgrading

> Adjusting work processes to ensure skills gained are put to use

Transform the federally funded Labour Market Programs offered in the provinces and territories

Avoid reliance on 21st Century Skills as the “silver bullet” that will end skills shortages

Mandate the new Future Skills Centre to include cognitive skills in its research

Canada’s provincial, territorial and federal governments are rapidly turning attention to the skill gaps in the economy and looking for the best ways to build them in the working-aged population. The solutions they implement will not succeed unless they also incorporate building literacy skills. Improving the literacy skills of Canada’s workforce – and putting them to full use – will close the skills gap and improve productivity.